The entry to record a purchase of merchandise on credit includes
A) a debit to Purchases and a credit to Accounts Receivable.
B) a credit to Purchases and a credit to Accounts Payable.
C) a debit to Accounts Payable and a credit to Purchases.
D) a debit to Purchases and a credit to Accounts Payable.

Question

Quizplus · Accepted Answer

When merchandise is purchased on credit, the Accounts Payable account is credited because the company owes money to the supplier. The Purchases account is debited to record the increase in inventory. Therefore, the correct entry would be a debit to Purchases and a credit to Accounts Payable.

The Entry to Record a Purchase of Merchandise on Credit